LLP
What Is a LLP ?
Limited liability partnerships (LLPs) allow for a partnership structure where each partner’s liabilities are limited to the amount they put into the business that means if the partnership fails, then creditors cannot go after a partner’s personal assets or income. LLPs are common in professional business like law firms, accounting firms, and tax consultancy.
LLP has become popular and preferred form of organisation as it incorporates the benefits of both partnership and company.
The Limited liability Partnership Act, 2008 regulates the LLP in India. Minimum two partners are required to incorporate an LLP. However, there is no upper limit on the maximum number of partners of an LLP.Among the partners, there should be a minimum of two designated partners who shall be individuals, and at least one of them should be resident in India. The rights and duties of designated partners are governed by the LLP agreement. They are directly responsible for the compliance of all the provisions of the LLP Act, 2008 and provisions specified in the LLP agreement.
Documents Required for LLP Registration-
- Pan Card/ID Proof and Address Proof of Partners.
- Residence Proof of Partners.
- Photographs
- Proof of Registered Office
- DSC for all Designated Partners
- Name of LLP
- DPIN of all Designated Partners
Various Forms required to be filed for Registration of LLP-
- RUN - LLP (Reserve Unique Name-Limited Liability Partnership) - For Name Reservation.
- FiLLiP - Form for Incorporation of LLP.
- FORM 3 - LLP agreement must be filed in Form 3.
- FORM 17 - Application and Statement for the conversion of a firm into LLP.
- FORM 18 - Application and Statement for conversion of a private limited company into LLP.
Advantages of LLP-
- Limited liability of partners.
- Seperate legal entity.
- Minimum compliance.
- Credibility for accessing Loan.
- Unlimited Partners
Disdvantages of LLP-
- Unable to attract Investments.
- Higher income tax rate as compared to companies.
- Penalty for non compliance.